The goal of this project is to assess the safety and to obtain preliminary information on the efficacy of the combination of alpha interferon with famciclovir as therapy of chronic hepatitis B. In this study, patients with chronic hepatitis B who have clinical features indicating that they are unlikely to respond to alpha interferon alone are being treated with both agents in a staggered fashion. The anti-viral activity of famciclovir is assessed by changes in levels of HBV DNA during the first 4 weeks of treatment and the additive effects of alpha interferon by the changes in viral levels during the ensuing weeks. The long-term efficacy of the combination is being assessed based upon whether therapy leads to sustained clearance of serum HBV DNA and HBeAg along with a fall of serum aminotransferases into the normal range. Evidence of activity of the combination of famciclovir and interferon in this study could lead to a multicenter trial of this regimen compared to each agent alone.